How Loan Markets Vary In Other States

October 15, 1989|By Jim DeBoth.

Ever wonder about real estate markets in other states? Are the same types of mortgage programs offered? What about interest rates-lower or higher? Real estate markets can vary greatly from one state to another. The makeup of a state`s real estate market can determine the characteristics of the region`s mortgage programs.

For example, Denver has had a slow real estate market for the last few years.

Market values have declined. Foreclosures have averaged 17,000 in each of the last two years. A number of mortgage lenders even have left the marketplace.

The impact on prospective Denver homeowners for conventional financing has resulted in a higher downpayment or loan-to-value mortgage arrangement.

In a declining market, lenders become conservative in their review of a mortgage.

Those on the underwriting side becomes more stringent in their requirements because of the possibility that they may acquire unwanted foreclosures.

In such a market, the percentage of government loans (VA, FHA) to conventional loans has remained high.

Josephine Perry, branch manager of Chemical Financial`s Chicago region, said that there is wide difference between the markets in the two cities. She is a past branch manager for Denver and past president of the Colorado Foreclusure Prevention Association.

The Chicago market is highly competitive and creative.

Because of the strong real estate activity and rising home values, lenders are competing among themselves for homeowners.

The result to the Chicago metropolitan consumer has been a wide variety of creative mortgage programs, such as limited documentation loans and higher qualifying ratio loans.

But mortgage rates, points and fees between areas usually are fairly equal because they all use the same secondary market outlets.

The economic forces that drive the source of funding for mortgages are national in scope.